An effective business continuity plan needs to consider every future possibility, including the death or disablement of your most important people.
Just as it’s wise to insure business assets against loss, its common sense to insure specialist or skilled people who use those assets or to create business profitability. Ideally, all identified key people should be covered, including yourself.
A critical illness is a serious illness or disability, such as cancer, heart attack or stroke. Statistics tell us that 50% of men and 33% of women will suffer a critical illness before the age of 70. So how would you pay off your debts and expenses? Would your customers and suppliers still want to deal with your business? And what would your business be worth if you had to sell? It’s worth thinking about.
The solution is Key Person Cover.
Key Person Cover injects cash into a business on the loss of a key person through death or disablement.
This money can provide funds for securing and integrating a suitable replacement, replace lost profits and help to reassure customers and creditors that the business is not experiencing a financial crisis.
Example
Medical practice recovers from injury
A keen sportswoman who loves a challenge, Sarah had been a GP for more than 10 years when she fractured several vertebrae in a skiing accident. She knew, better than anyone, that back injuries are unpredictable. Although she had no spinal cord damage, she would need surgery and several months off work. How would she keep her thriving GP practice going while she was recovering?
Fortunately Sarah had prepared herself for this possibility and could claim on two forms of insurance. Firstly, she had Personal Income Protection. Secondly, she had Locum Cover (a form of Key Person Cover), which would cover the cost of hiring a doctor to keep her practice going for up to one year. After nine months of rest and careful rehabilitation, Sarah was able to resume to her work as a GP.